Wendy's Sees 25% Sales Increases at Prototype Units

In January, Wendy’s CEO Emil J. Brolick told investors he had a winning recipe to revive the historic brand, as he outlined a strategy that included both a “people reboot” and a push to roll out new store prototypes.

During the company’s second-quarter earnings call on August 9, Brolick said early results indicate reimaged stores really are the magic touch for reviving sales. Same-store sales in North America increased 3.2 percent for the company during the second quarter.

Wendy’s 10 prototype restaurants, which opened in 2011, sustained an average sales lift greater than 25 percent, with those stores first reimaged continuing to see a lift for 12 months, he said.

In 2012, the company expects to reimage 50 company stores and to build an additional 17 stores with the new image, Brolick said.

The first franchised reimaged store, in Hershey, Pennsylvania, opened in early July, and initial sales were outstanding, he said. The quick-serve also opened a new company store in Oren, Utah, with an urban design. Initial results for both stores showed a significant sales increase, he said.

On July 16, Wendy’s launched a mobile app for smart phones, allowing consumers to set target calorie levels and view several meal choices that meet those targets. “We’ve seen impressive results,” Brolick said, with more than 26,000 users spending an average of nine-and-a-half minutes per visit using the application.

Overall customer service indicators rose significantly above 2011 levels during the quarter, as the company continued its efforts to improve customer service. Each additional 10-point improvement in customer satisfaction measurements correlated to around $46,000 in additional sales per restaurant, he said.

During the quarter, Wendy’s acquired 30 franchised stores in Austin, Texas (following the acquisition of another 24 in Albuquerque, New Mexico, in Q3). Brolick said increasing both company and franchised stores in a geographical location increases the number of stores for operators eager to grow.

He also added that the company expects to build around 20 new company stores with the new image, and Wendy’s North American franchisees are planning to open 40 of the newly imaged restaurants. Brolick told investors the long-term goal is to lower, by a small amount, the number of company-operated restaurants.

By Jan Fletcher

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